Bridge Bancorp, Inc. Reports Fourth Quarter and Year End 2016 Results

Published 8:00 AM ET Fri, 27 Jan 2017
Globe Newswire

SHARES

BRIDGEHAMPTON, N.Y., Jan. 27, 2017 (GLOBE NEWSWIRE) -- Bridge Bancorp, Inc. (NASDAQ:BDGE), the parent company of The Bridgehampton National Bank (“BNB”), today announced fourth quarter and year end results for 2016. Highlights of the Company's financial results for the quarter and year include:

Record net income of $9.2 million, an increase of $1.2 million or 15% over 2015, and $.50 per diluted share for the quarter.

Record net income of $35.5 million, an increase of $14.4 million or 68% over 2015, and $2.00 per diluted share for the year.

Returns on average assets and equity were .93% and 9.50%, respectively, for the 2016 fourth quarter and .92% and 9.82%, respectively, for the full year.

Net interest income increased $2.3 million to $30.2 million, with a net interest margin of 3.41% for the 2016 fourth quarter and increased $24.8 million to $120.9 million, with a net interest margin of 3.48% for the year as compared to the same periods the prior year.

Total assets of $4.1 billion at December 2016, 7% higher than December 2015.

Loan growth of $190 million or 8% compared to December 2015.

Deposits of $2.9 billion at December 2016, including $1.2 billion in non-interest bearing demand deposits.

Continued solid asset quality metrics and reserve coverage.

All capital ratios exceed the fully phased in requirements of Basel III rules.

Declared a dividend of $.23 during the quarter.

“2016 reflected another strong year for our company as we built on the organization we've worked to create both organically and through acquisition. In addition to adding customers and growing loans and deposits we launched our ‘Believe iN Beyond’ initiative. This created a company stronger and better prepared for further expansion. We also implemented financial and organizational changes to improve financial strength, risk management processes and operating structure providing a platform more appropriate for a bank approaching $5 billion in assets. All of this was accomplished while achieving record earnings and delivering strong results,” noted Kevin M. O’Connor, President and CEO.

Net Earnings and ReturnsNet income for the quarter was $9.2 million or $.50 per diluted share, compared to $8.0 million or $.46 per diluted share for the fourth quarter of 2015. Returns on average assets and equity for the fourth quarter of 2016 were .93% and 9.50%, compared to .88% and 9.27% in 2015, respectively. Return on average tangible common equity for the fourth quarter of 2016 was 13.43% compared to 13.33% in 2015. Net income for the year ended December 2016 was $35.5 million or $2.00 per diluted share, compared to $21.1 million or $1.43 per diluted share in 2015. Returns on average assets and equity for the full year 2016 were .92% and 9.82%, compared to .71% and 7.91% in 2015, respectively. Return on average tangible common equity for 2016 was 14.21% compared to 10.23% in 2015. The significant increases in net income and related returns for 2016 over 2015 relate primarily to the acquisition of CNB in June 2015.

Core(1) net income reflects the quarterly and full year results adjusted for certain costs, net of tax, primarily related to the CNB acquisition. Core net income for the fourth quarter was $9.1 million or $.50 per diluted share, compared to $8.5 million or $.49 per diluted share, for the same period in 2015. Core returns on average assets and equity for the fourth quarter of 2016 were .92% and 9.43%, compared to .94% and 9.90% in 2015, respectively. Core return on average tangible common equity for the fourth quarter of 2016 was 13.60% compared to 14.56% in 2015. Core net income for the full year 2016 was $35.6 million or $2.00 per diluted share, compared to $27.3 million or $1.85 per diluted share, for the same period in 2015. Core returns on average assets and equity for the full year 2016 were .93% and 9.87%, compared to .92% and 10.23% in 2015, respectively. Core return on average tangible common equity for the full year 2016 was 14.57% compared to 13.47% in 2015.

Interest income increased $3.0 million for the fourth quarter of 2016 over the same period in 2015 as average earning assets increased by $258.5 million or 8%, due primarily to loan growth, and the net interest margin increased to 3.41% from 3.39%. Interest income increased $31.5 million for the full year 2016 over 2015 as average earning assets increased by $779.2 million or 29% while the net interest margin decreased to 3.48% from 3.57%. The increase in average earning assets year over year reflects the full year effect of assets acquired from CNB as well as organic growth in loans and securities. The decrease in the net interest margin reflects the higher costs of borrowings associated with the $80 million in subordinated debentures issued in September 2015 and higher overall borrowing costs due to the Fed Funds rate increase in December 2015.

The provision for loan losses was $1.4 million for the 2016 fourth quarter, $.4 million higher than the fourth quarter of 2015 and $5.6 million for the full year 2016, $1.6 million higher than 2015. The higher provision for the fourth quarter and full year of 2016 is due to portfolio growth as well as certain acquired loans being refinanced by BNB. Acquired loans are recorded at fair value at acquisition, effectively netting estimated future losses against the loan balances, whereas loans originated and refinanced by BNB have recorded reserves. The Company recognized net recoveries of $.2 million in the fourth quarter of 2016 compared to net charge-offs of $.4 million for the same period in 2015. The Company recognized net charge-offs of $.4 million for the full year 2016 compared to net charge-offs of $.9 million for 2015.

Total non-interest income was $3.7 million for the fourth quarter of 2016, $.3 million higher than 2015, resulting from an increase in BOLI income and gain on sale of SBA loans offset by a decrease in fees for other customer services. Total non-interest income was $16.0 million for the full year 2016, $3.4 million higher than 2015, primarily attributable to the CNB acquisition and resulting from increases in BOLI income, gain on sale of SBA loans, service charges, fees for other customer services and gain on sales of securities.

Non-interest expense for the fourth quarter of 2016 increased to $18.5 million from $18.2 million in 2015. The increase is a result of increases in salaries and benefits expense, technology and communications, marketing and advertising, professional services, amortization of intangibles and other operating expenses, offset by decreases in acquisition costs and FDIC assessment. Non-interest expense for the full year 2016 increased to $77.1 million from $72.9 million in 2015. The increase is a result of increases in all expense categories, offset by a decrease in acquisitions costs, all of which are attributable to the CNB acquisition. The reversal of accrued acquisition costs for the 2016 fourth quarter and full year is due to the reversal of pending merger related liabilities recorded at the acquisition date which have since been settled. The Company’s ratio of operating expenses to average assets decreased to 1.88% in the fourth quarter of 2016 from 2.00% in 2015. The Company’s ratio of operating expenses to average assets decreased to 2.00% for the full year 2016 from 2.46% in 2015. Core operating expenses to average assets was 1.97% for the full year 2016 compared to 2.08% in 2015.

Balance Sheet and Asset QualityTotal assets were $4.1 billion at December 31, 2016, $272.6 million higher than December 2015. Total loans at December 2016 of $2.6 billion reflect growth of $189.7 million or 8% over December 2015. This increase in loans was funded by growth in deposits and borrowings. Deposits totaled $2.9 billion at December 2016, an increase of $82.4 million over 2015. Demand deposits totaled $1.2 billion at December 2016, representing 39% of total deposits.

Asset quality measures remained strong, as non-performing assets were $1.2 million or .03% of total assets at December 2016 compared to $1.6 million or .04% of total assets at December 2015. Non-performing loans were $1.2 million or .05% of total loans at December 2016 compared to $1.3 million or .06% of total loans at December 2015. Loans 30 to 89 days past due increased $.7 million to $2.2 million at December 2016, with $1.0 million representing CNB acquired loans. Loans past due 90 days and still accruing at December 31, 2016 and 2015 were comprised of acquired loans of $1.0 million. Additionally, the Company held no other real estate owned at December 2016 compared to $0.3 million at December 2015.

The allowance for loan losses increased $5.2 million to $25.9 million at December 2016 from $20.7 million as of December 2015. The allowance as a percentage of loans was 1.00% at December 31, 2016 compared to .86% at December 31, 2015. The allowance as a percentage of BNB originated loans was 1.23%, based on BNB originated loans totaling $2.1 billion, at December 2016, compared to 1.21%, based on BNB originated loans totaling $1.7 billion, at December 2015. The increase in the allowance for loan losses is due to portfolio growth, as well as certain acquired loans being refinanced by BNB.

Stockholders’ equity grew $66.9 million to $408.0 million at December 2016, compared to $341.1 million at December 2015. The growth reflects earnings, the $47.5 million in net capital raised in connection with the November 2016 common stock offering and the dividend reinvestment plan, partially offset by shareholders' dividends and a decrease in the fair value of available for sale investment securities. The Company's capital ratios exceed all fully phased in capital requirements under the Basel III rules and the Bank remains classified as well capitalized.

“As many expected, the Federal Reserve raised rates in December and is expected to continue doing so throughout 2017. This will present new challenges for the industry as it has been quite some time since the Fed’s last sustained rate increase. We have been, and will continue to be, thoughtful about our asset/liability mix and how to best position our balance sheet for this new environment. Additionally, we anticipate our effective income tax rate in 2017 will remain between 34% and 35%. However, the effective income tax rate may change materially should changes to current tax law be enacted in 2017. Any changes to current tax law may also have an impact on our deferred tax position,” noted Mr. O’Connor.

“During the fourth quarter we took advantage of the market’s positive outlook for financial stocks and raised close to $50 million in common equity. This strengthened our balance sheet and will enable us to take advantage of opportunities in our marketplace. Long Island continues to be one of the most attractive banking markets in the country and our model of on-the-ground bankers and local decision makers gives us a competitive advantage,” stated Mr. O’Connor.

About Bridge Bancorp, Inc.Bridge Bancorp, Inc. is a bank holding company engaged in commercial banking and financial services through its wholly owned subsidiary, The Bridgehampton National Bank. Established in 1910, BNB, with assets of approximately $4.1 billion, operates 40 retail branch locations serving Long Island and the greater New York metropolitan area. In addition, the Bank operates two loan production offices: one in Manhattan, and one in Riverhead, New York. Through its branch network and its electronic delivery channels, BNB provides deposit and loan products and financial services to local businesses, consumers and municipalities. Title insurance services are offered through BNB's wholly owned subsidiary, Bridge Abstract. Bridge Financial Services, Inc. offers financial planning and investment consultation. For more information visit www.bridgenb.com.

BNB also has a rich tradition of involvement in the community, supporting programs and initiatives that promote local business, the environment, education, healthcare, social services and the arts.

Please see the attached tables for selected financial information.

This report may contain statements relating to the future results of the Company (including certain projections and business trends) that are considered “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). Such forward-looking statements, in addition to historical information, involve risk and uncertainties, and are based on the beliefs, assumptions and expectations of management of the Company. Words such as “expects,” “believes,” “should,” “plans,” “anticipates,” “will,” “potential,” “could,” “intend,” “may,” “outlook,” “predict,” “project,” “would,” “estimated,” “assumes,” “likely,” and variation of such similar expressions are intended to identify such forward-looking statements. Examples of forward-looking statements include, but are not limited to, possible or assumed estimates with respect to the financial condition, expected or anticipated revenue, and results of operations and business of the Company, including earnings growth; revenue growth in retail banking lending and other areas; origination volume in the consumer, commercial and other lending businesses; current and future capital management programs; non-interest income levels, including fees from the title abstract subsidiary and banking services as well as product sales; tangible capital generation; market share; expense levels; and other business operations and strategies. The Company claims the protection of the safe harbor for forward-looking statements contained in the PSLRA.

Factors that could cause future results to vary from current management expectations include, but are not limited to, changing economic conditions; legislative and regulatory changes, including increases in FDIC insurance rates; monetary and fiscal policies of the federal government; changes in tax policies; rates and regulations of federal, state and local tax authorities; changes in interest rates; deposit flows; the cost of funds; demands for loan products; demand for financial services; competition; changes in the quality and composition of the Bank’s loan and investment portfolios; changes in management’s business strategies; changes in accounting principles, policies or guidelines; changes in real estate values; an unexpected increase in operating costs; expanded regulatory requirements as a result of the Dodd-Frank Act; and other risk factors discussed elsewhere, and in our reports filed with the Securities and Exchange Commission. The forward-looking statements are made as of the date of this report, and the Company assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.

BRIDGE BANCORP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Condition (unaudited)

(In thousands, except per share amounts and financial ratios)

December 31,

December 31,

2016

2015

ASSETS

Cash and Due from Banks

$

102,280

$

79,750

Interest Earning Deposits with Banks

11,558

24,808

Total Cash and Cash Equivalents

113,838

104,558

Securities Available for Sale, at Fair Value

819,722

800,203

Securities Held to Maturity

223,237

208,351

Total Securities

1,042,959

1,008,554

Securities, Restricted

34,743

24,788

Loans Held for Investment

2,600,440

2,410,774

Allowance for Loan Losses

(25,904

)

(20,744

)

Loans, net

2,574,536

2,390,030

Premises and Equipment, net

35,263

39,595

Goodwill and Other Intangible Assets

111,774

106,821

Other Real Estate Owned

-

250

Accrued Interest Receivable and Other Assets

141,457

107,363

Total Assets

$

4,054,570

$

3,781,959

LIABILITIES AND STOCKHOLDERS' EQUITY

Demand Deposits

$

1,151,268

$

1,156,882

Savings, NOW and Money Market Deposits

1,568,009

1,393,888

Certificates of Deposit of $100,000 or more

126,198

167,750

Other Time Deposits

80,534

125,105

Total Deposits

2,926,009

2,843,625

Federal Funds Purchased and Repurchase Agreements

100,674

170,891

Federal Home Loan Bank Advances

496,684

297,507

Subordinated Debentures

78,502

78,363

Junior Subordinated Debentures

15,244

15,878

Other Liabilities and Accrued Expenses

29,470

34,567

Total Liabilities

3,646,583

3,440,831

Total Stockholders' Equity

407,987

341,128

Total Liabilities and Stockholders' Equity

$

4,054,570

$

3,781,959

Selected Financial Data:

Book Value Per Share

$

21.36

$

19.62

Tangible Book Value Per Share (1)

$

15.51

$

13.47

Common Shares Outstanding

19,100

17,389

Capital Ratios:

Total Capital to Risk Weighted Assets

15.0

%

13.6

%

Tier 1 Capital to Risk Weighted Assets

11.3

%

9.9

%

Common Equity Tier 1 Capital to Risk Weighted Assets

10.8

%

9.3

%

Tier 1 Capital to Average Assets

8.6

%

7.6

%

Tangible Common Equity to Tangible Assets (1) (2)

7.5

%

6.4

%

Tier 1 Capital to Average Assets (Bank)

9.9

%

9.1

%

Asset Quality:

Loans 30-89 Days Past Due

$

2,156

$

1,505

Loans 90 Days Past Due and Accruing (3)

$

1,027

$

964

Non-performing Loans

$

1,241

$

1,350

Other Real Estate Owned

-

250

Non-performing Assets

$

1,241

$

1,600

Non-performing Loans/Total Loans

0.05

%

0.06

%

Non-performing Assets/Total Assets

0.03

%

0.04

%

Allowance/Non-performing Loans

2087.35

%

1536.59

%

Allowance/Total Loans

1.00

%

0.86

%

Allowance/Originated Loans

1.23

%

1.21

%

(1) Tangible stockholder's equity totaled $296.2 million and $234.3 million at December 31, 2016 and 2015, respectively, and represents total stockholder's equity less goodwill and other intangible assets.

(2) Tangible assets totaled $3.94 billion and $3.68 billion at December 31, 2016 and 2015, respectively, and represents total assets less goodwill and other intangible assets.

(3) Represents loans acquired in connection with the Community National Bank, FNBNY Bancorp, Inc., and Hamptons State Bank acquisitions.

(2) Average tangible stockholder's equity totaled $271.3 million and $238.0 million for the three months ended December 31, 2016 and 2015, respectively, and $249.8 million and $206.3 million for the twelve months ended December 31, 2016 and 2015, respectively, and represents average total stockholder's equity less average goodwill and other intangible assets.

BRIDGE BANCORP, INC. AND SUBSIDIARIES

Non-GAAP Disclosure (unaudited)

(In thousands, except per share amounts and financial ratios)

Reconciliation of As Reported (GAAP) and Core (Non-GAAP) financial measures for the three months and twelve months ended December 31, 2016 and 2015 (1):

Three months ended

Twelve months ended

December 31,

December 31,

2016

2015

2016

2015

Return on Average Total Assets - As Reported

0.93

%

0.88

%

0.92

%

0.71

%

Acquisition Costs

(0.07

%)

0.05

%

(0.02

%)

0.33

%

Amortization of Non Compete Agreement

0.06

%

0.04

%

0.04

%

0.02

%

Gain on Sale of Loans

0.00

%

0.00

%

0.00

%

(0.01

%)

Measurement Period Fixed Asset Adjustment (2)

0.00

%

0.00

%

(0.01

%)

0.00

%

Income Tax Effect of Adjustments Above

0.00

%

(0.03

%)

0.00

%

(0.12

%)

Tax Benefit Related to NYC Tax Law Change

0.00

%

0.00

%

0.00

%

(0.01

%)

Core Return on Average Total Assets

0.92

%

0.94

%

0.93

%

0.92

%

Return on Average Stockholders' Equity - As Reported

9.50

%

9.27

%

9.82

%

7.91

%

Acquisition Costs

(0.67

%)

0.56

%

(0.25

%)

3.65

%

Amortization of Non Compete Agreement

0.57

%

0.42

%

0.40

%

0.27

%

Gain on Sale of Loans

0.00

%

0.00

%

0.00

%

(0.10

%)

Measurement Period Fixed Asset Adjustment (2)

0.00

%

0.00

%

(0.09

%)

0.00

%

Income Tax Effect of Adjustments Above

0.03

%

(0.35

%)

(0.01

%)

(1.37

%)

Tax Benefit Related to NYC Tax Law Change

0.00

%

0.00

%

0.00

%

(0.13

%)

Core Return on Average Stockholders' Equity

9.43

%

9.90

%

9.87

%

10.23

%

Return on Average Tangible Common Equity - As Reported

13.43

%

13.33

%

14.21

%

10.23

%

Acquisition Costs

(0.95

%)

0.81

%

(0.37

%)

4.74

%

Amortization of Other Intangible Assets

1.21

%

1.12

%

1.06

%

0.70

%

Gain on Sale of Loans

0.00

%

0.00

%

0.00

%

(0.14

%)

Measurement Period Fixed Asset Adjustment (2)

0.00

%

0.00

%

(0.12

%)

0.00

%

Income Tax Effect of Adjustments Above

(0.09

%)

(0.70

%)

(0.21

%)

(1.89

%)

Tax Benefit Related to NYC Tax Law Change

0.00

%

0.00

%

0.00

%

(0.17

%)

Core Return on Average Tangible Common Equity

13.60

%

14.56

%

14.57

%

13.47

%

Efficiency Ratio - As Reported

54.09

%

57.45

%

55.76

%

66.19

%

Non Interest Expense (Operating Expense) - As Reported

$

18,529

$

18,173

$

77,081

$

72,890

Less: Acquisition Costs

(650

)

483

(920

)

9,766

Less: Amortization of Other Intangible Assets

827

677

2,637

1,447

Less: Measurement Period Fixed Asset Adjustment (2)

-

-

(309

)

-

Core Non Interest Expense (Core Operating Expense)

$

18,352

$

17,013

$

75,673

$

61,677

Net Interest Income (fully taxable equivalent)

$

30,509

$

28,222

$

122,201

$

97,459

Non Interest Income - As Reported

3,748

3,411

16,046

12,668

Less: Net Securities Gains (Losses)

-

2

449

(8

)

Less: Gain on Sale of Loans

-

-

-

279

Core Total Revenues for Efficiency Ratio

$

34,257

$

31,631

$

137,798

$

109,856

Core Efficiency Ratio

53.57

%

53.79

%

54.92

%

56.14

%

Operating Expense as a % of Average Assets - As Reported

1.88

%

2.00

%

2.00

%

2.46

%

Acquisition Costs

0.07

%

(0.05

%)

0.02

%

(0.33

%)

Amortization of Other Intangible Assets

(0.08

%)

(0.08

%)

(0.06

%)

(0.05

%)

Measurement Period Fixed Asset Adjustment (2)

0.00

%

0.00

%

0.01

%

0.00

%

Core Operating Expense as a % of Average Assets

1.87

%

1.87

%

1.97

%

2.08

%

Three months ended

Twelve months ended

December 31,

December 31,

2016

2015

2016

2015

Net Income/Diluted Earnings Per Share - As Reported

$

9,160

$

0.50

$

7,995

$

0.46

$

35,491

$

2.00

$

21,111

$

1.43

Adjustments:

Acquisition Costs

(650

)

(0.03

)

483

0.03

(920

)

(0.05

)

9,766

0.67

Amortization of Non Compete Agreement

547

0.03

364

0.02

1,459

0.08

729

0.05

Gain on Sale of Loans

-

-

-

-

-

-

(279

)

(0.02

)

Measurement Period Fixed Asset Adjustment (2)

-

-

-

-

(309

)

(0.02

)

-

-

Income Tax Effect of Adjustments Above

36

-

(304

)

(0.02

)

(80

)

(0.01

)

(3,656

)

(0.26

)

Tax Benefit Related to NYC Tax Law Change

-

-

-

-

-

-

(351

)

(0.02

)

Core Net Income/Core Diluted Earnings Per Share

$

9,093

$

0.50

$

8,538

$

0.49

$

35,641

$

2.00

$

27,320

$

1.85

(1) The tables above provide a reconciliation of GAAP (As Reported) and non-GAAP (Core) financial measures. A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in the United States ("U.S. GAAP"). The Company’s management believes the presentation of non-GAAP financial measures provide investors with a greater understanding of the Company’s operating results in addition to the results measured in accordance with GAAP. While management uses these non-GAAP measures in its analysis of the Company’s performance, this information should not be viewed as a substitute for financial results determined in accordance with GAAP or considered to be more important than financial results determined in accordance with GAAP.

(2) A fixed asset measurement period adjustment for $0.3 million was recorded in 2016 related to the recovery of depreciation expense recorded in 2015.

BRIDGE BANCORP, INC. AND SUBSIDIARIES

Supplemental Financial Information

Condensed Consolidated Average Balance Sheets And Average Rate Data (unaudited)

(Dollars in thousands)

Three months ended December 31,

2016

2015

Average

Average

Average

Yield/

Average

Yield/

Balance

Interest

Cost

Balance

Interest

Cost

Interest Earning Assets:

Loans, net (including loan fee income) (1)

$

2,551,589

$

29,691

4.63

%

$

2,331,138

$

26,473

4.51

%

Securities (1)

987,195

5,236

2.11

945,660

5,434

2.28

Deposits with Banks

23,735

32

0.54

27,248

20

0.29

Total Interest Earning Assets (1)

3,562,519

34,959

3.90

3,304,046

31,927

3.83

Non Interest Earning Assets:

Other Assets

350,803

305,407

Total Assets

$

3,913,322

$

3,609,453

Interest Bearing Liabilities:

Deposits

$

1,792,260

$

1,913

0.42

%

$

1,757,201

$

1,613

0.36

%

Federal Funds Purchased and Repurchase Agreements

179,307

296

0.66

138,519

154

0.44

Federal Home Loan Bank Advances

307,669

768

0.99

165,677

462

1.11

Subordinated Debentures

78,479

1,135

5.75

78,378

1,135

5.75

Junior Subordinated Debentures

15,334

338

8.77

15,877

341

8.52

Total Interest Bearing Liabilities

2,373,049

4,450

0.75

2,155,652

3,705

0.68

Non Interest Bearing Liabilities:

Demand Deposits

1,122,378

1,079,762

Other Liabilities

34,238

31,742

Total Liabilities

3,529,665

3,267,156

Stockholders' Equity

383,657

342,297

Total Liabilities and Stockholders' Equity

$

3,913,322

$

3,609,453

Net Interest Income/Interest Rate Spread (1)

30,509

3.15

%

28,222

3.15

%

Net Interest Earning Assets/Net Interest Margin (1)

$

1,189,470

3.41

%

$

1,148,394

3.39

%

Tax Equivalent Adjustment

(344

)

(318

)

Net Interest Income

$

30,165

$

27,904

(1) Presented on a tax equivalent basis.

BRIDGE BANCORP, INC. AND SUBSIDIARIES

Supplemental Financial Information

Condensed Consolidated Average Balance Sheets And Average Rate Data (unaudited)